Constellation Can Crow Over Another New Purchase

Wine giant snaps up the popular Rex Goliath line from Hahn Estates in California

Tim Fish
Posted: September 28, 2005

Fast-growing California value brand Rex Goliath has been purchased by beverage giant Constellation Brands. The sale price was not disclosed, but sources close to the deal said it was upward of $40 million.

Hahn Estates in Monterey County launched Rex Goliath in 2002 with an initial 25,000-case release, and the brand has grown since then to 500,000 cases. The label makes six wines, including Cabernet Sauvignon, Chardonnay and Shiraz, all of which carry the broad California appellation and are priced from $7 to $9.

"We were not seeking to sell. Constellation approached us," Hahn president Bill Leigon said. "But we felt that we were at a turning point. We were fast heading to a million cases, and we decided to concentrate on our core business, Hahn Estates."

In a statement, Constellation CEO Richard Sands said, "Rex Goliath is a wonderful addition to our portfolio. The brand clearly has been embraced by consumers across the U.S."

The deal is expected to be completed by mid-October.

The Rex Goliath brand takes its name and label artwork from a 19th-century circus attraction that featured a 47-pound rooster billed as the world's largest. The "HRM" that precedes Rex Goliath on the label is short for "His Royal Majesty."

Hahn Estates is owned by the Nicolaus Hahn family. Other than Rex Goliath, the company produces about 150,000 cases annually, including Merlot, Chardonnay and Cabernet, from its 1,200 acres of vineyards in Monterey. Its wines are priced from $12 to $20.

Leigon said Hahn plans to double production to about 300,000 cases and add a new line of single-vineyard wines, starting with the release of Hahn Estates Syrah Santa Lucia Highlands Lone Oak Vineyard 2003 ($30) later this fall.

The purchase of Rex Goliath is the latest in a shopping spree for Constellation. In late 2004, the Fairport, N.Y.-based company paid more than $1.3 billion for Robert Mondavi Corp. and spent $80 million to acquire a 40 percent interest in the well-known Italian producer Ruffino. In 2003, it paid $1.1 billion for one of Australia's best-known producers, BRL Hardy.

All of this is part of Constellation's transformation from a company built largely on inexpensive wine brands--such as Almaden, Paul Masson and Richard's Wild Irish Rose--into one that covers almost every price level with a broad spectrum of wines, including well-respected California names such as Ravenswood, Simi and Franciscan Oakville.